(SEATTLE) — The Justice Department announced Tuesday that the cryptocurrency giant Binance and its CEO are pleading guilty to violations of U.S. anti-money laundering laws while agreeing to pay more than $4 billion in fines.
Chengpeng Zhao, the company’s founder, pleaded guilty in federal court in Seattle on Tuesday for failing to maintain an effective anti-money laundering program and has agreed to resign as part of his plea deal, the Justice Department said. The company has also agreed to enter in a number of anti-money laundering and sanctions compliance programs and retain an independent monitor for the next three years.
The government says that by willfully ignoring their obligations to register as a money transmitting business, Binance allowed money to flow unfettered to terrorists, cybercriminals and child abusers who used their platform — the world’s largest cryptocurrency exchange. They also accuse the company of profiting off scores of illegal transactions between U.S.-based users and people in sanctioned countries like Iran, Cuba, Syria and Russian-occupied regions in Ukraine. In just a four year period, the department alleges Binance caused over $898 million in trades between U.S. users and users in Iran.
DOJ says the more than $4 billion in fines the company has agreed to pay amounts to one of the “largest corporate penalties in U.S. history.” Zhao has separately agreed to pay a $50 million fine as part of his plea deal.
While the felony charge Zhao pleaded guilty to carries a maximum sentence of 10 years in prison, it’s not immediately clear what federal prosecutors will recommend he ultimately serve under the agreement. Officials told reporters at the Justice Department on Tuesday that they will recommend at least some period of incarceration.
According to the deal, however, it appears Zhao, who confirmed he plans to step down from his role, could ultimately return as CEO — given the terms of the plea agreement will lapse after a period of three years.
In plea documents filed today in Seattle, the department details how Binance executives were warned of the legal risks they could face by not implementing the proper protocols to flag or report suspicious transactions, and how their structure could ultimately attract criminals.
One compliance employee allegedly wrote, “we need a banner ‘is washing drug money too hard these days – come to binance we got cake for you.”
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